Detroit council OKs pension freeze; vote on furloughs for mayoral, council workers delayed

4:05 PM, January 16, 2013

Detroit would save about $250,000 a month with the furloughs of mayoral and council employees, which would be equal to a 20% pay cut. The pension freeze would save the city about $25 million, according to the mayor’s office. / Romain Blanquart/Detroit Free Press

The Detroit City Council approved a one-year pension freeze for city workers this afternoon, but it did not support a wage reduction for nonunion workers of up to 20% sought by Mayor Dave Bing in an ongoing effort to address the city’s cash crisis.

Instead of the 20% cut, the council decided to pursue a 10% pay cut for workers in the executive and legislative branches. A public hearing on the 10% pay cut, which would be achieved through unpaid furlough days, is scheduled for Jan. 25.

Council President Charles Pugh said the 10% pay cut is enough because city workers already have sacrificed.

“We don’t want this to be an attack on our workers, balancing this budget on the backs of our workers,” he said.

The council had planned to vote on the 20% pay cut today. But at a public hearing this morning to discuss the proposals, Councilman Andre Spivey advocated for an alternative that would cut nonunion workers’ pay by 10% instead of 20%.

The furloughs of mayoral and council employees equal to a 20% pay cut were expected to save about $250,000 a month. The pension freeze would save the city about $25 million, according to the mayor’s office.

The reductions – along with a 70-30 health care plan the council approved Tuesday – are part of the mayor’s plan to stem the city’s cash crisis and to try to convince Gov. Rick Snyder and state Treasurer Andy Dillon that Detroit doesn't need deeper outside intervention to resolve its financial problems.

Nonunion employees of the executive and legislative branches of city government would face the furloughs first, but negotiations with the unions are expected to spread the plan to the rest of the city's work force.

The expedited nature of some of the cuts, however, could lead to hasty reductions in city services, Spivey said at the public hearing this morning. A 10% wage reduction now – with the possibility of further cuts in the near future – would force the administration to find other ways to save money.

“I trust the process to move forward together, but we also have to keep a watchful eye on the administration as well, and this is one way for us to do that,” he said. “Let’s push them to find some alternative savings by giving them 10 right now.”

Several members of the public, including city workers, appeared at this morning’s hearing to oppose the proposed pay cuts.

June Nickleberry, a city worker since 1988, said the pension freeze would unfairly put off her retirement an extra year. She said city workers can’t take another round of cuts.

“I’m making now the same thing I was making as a bus driver in 1988,” she said after addressing the council.

The pension freeze would apply to all employees eligible for pensions through the city's General Retirement, including police and firefighters. The pension proposal would allow the city to defer a $25-million payment to the pension system -- to a later, unspecified date -- by making employees ineligible to accrue credit for time served from Feb. 1 through Jan. 31, 2014. The savings presume the city can negotiate the cut with employee unions.